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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________.
COMMISSION FILE NUMBER: 001-13779
W. P. CAREY & CO. LLC
("WPC")
(FORMERLY CAREY DIVERSIFIED LLC)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-3912578
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
50 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBERS:
INVESTOR RELATIONS (212) 492-8920
(212) 492-1100
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
LISTED SHARES, NO PAR VALUE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained in this report, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. | |
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |X| No | |
As of June 30, 2003, the aggregate market value of the Registrants' Listed
Shares held by non-affiliates was $778,220,456.
As of March 5, 2004, there are 36,771,273 Listed Shares of Registrant
outstanding.
WPC incorporates by reference its definitive Proxy Statement with respect
to its 2004 Annual Meeting of Shareholders, to be filed with the Securities and
Exchange Commission within 120 days following the end of its fiscal year, into
Part III of this Report.
W. P. CAREY & CO. LLC
PART I
Item 1. Business.
W. P. Carey & Co. LLC (the "Company" or "WPC") is a real estate investment and
advisory company that acquires and owns commercial properties leased to
companies nationwide, primarily on a triple net basis and earns fees as the
advisor to five affiliated CPA(R) REITs that each make similar investments.
Under the advisory agreements with the CPA(R) REITs, the Company performs
services related to the day-to-day management of the CPA(R) REITs and
transaction-related services. W. P. Carey & Co. LLC now both owns and manages
commercial and industrial properties located in 41 states and Europe, net leased
to more than 260 tenants. As of December 31, 2003, WPC's portfolio consisted of
171 properties in the United States and 15 properties in Europe and totaled more
than 18.4 million square feet. In addition, W. P. Carey & Co. LLC manages over
500 additional net leased properties on behalf of the CPA(R) REITs: Carey
Institutional Properties Incorporated ("CIP(R)"), Corporate Property Associates
12 Incorporated ("CPA(R):12"), Corporate Property Associates 14 Incorporated
("CPA(R):14"), Corporate Property Associates 15 Incorporated ("CPA(R):15") and
Corporate Property Associates 16-Global Incorporated ("CPA(R):16 - Global").
WPC's core real estate investment strategy for itself and on behalf of the
CPA(R) REITs is to purchase properties leased to a variety of companies on a
single tenant net lease basis that are either owned outright or owned by an
entity managed by WPC.
These leases generally place the economic burden of ownership on the tenant by
requiring them to pay the costs of maintenance, insurance, taxes, structural
repairs and other operating expenses. WPC also generally seeks to include in its
leases:
- clauses providing for mandated rent increases or periodic rent
increases tied to increases in the consumer price index or other
indices in the jurisdiction in which the property is located or,
when appropriate, increases tied to the volume of sales at the
property;
- covenants restricting the activity of the tenant to reduce the risk
of a change in credit quality;
- indemnification of WPC for environmental and other liabilities; and
- guarantees from parent companies or other entities.
Under the advisory agreements with the CPA(R) REITs, the Company performs
services related to the day-to-day management of the CPA(R) REITs and
transaction-related services in connection with structuring and negotiating real
estate acquisitions and mortgage financing. The Company earns an asset
management fee at a per annum rate of 1/2 of 1% of Average Invested Assets, as
defined in the Advisory Agreement, for each CPA(R) REIT and, based upon specific
performance criteria for each CPA(R) REIT, may be entitled to receive a
performance fee of 1/2 of 1% of Average Invested Assets. Fees for
transaction-related services are only earned for completed transactions. The
Company is reimbursed for the cost of personnel provided for the administration
of the CPA(R) REITs.
The Company was formed as a limited liability company under the laws of Delaware
on July 15, 1996. Since January 1, 1998, the Company has been consolidated with
nine Corporate Property Associates limited partnerships and their successors and
is the General Partner and owner of all of the limited partnership interests in
each partnership. The Company's shares began trading on the New York Stock
Exchange on January 21, 1998. As a limited liability company, WPC is not subject
to federal income taxation as long as it satisfies certain requirements relating
to its operations; however, certain subsidiaries of its management operations
are subject to federal and state income taxes and certain subsidiaries may be
subject to foreign taxes.
WPC's principal executive offices are located at 50 Rockefeller Plaza, New York,
NY 10020 and its telephone number is (212) 492-1100. WPC's website address is
http://www.wpcarey.com. As of December 31, 2003, WPC employed no employees
directly, however a wholly-owned subsidiary of WPC employs 120 individuals who
perform services for WPC and on behalf of the CPA(R) REITs.
BUSINESS OBJECTIVES AND STRATEGY
WPC's objective is to increase shareholder value and earnings through prudent
management of its real estate assets and opportunistic investments and through
the expansion of its asset and private equity management business. WPC expects
to evaluate a number of different opportunities in a variety of property types
and geographic locations and to pursue the most attractive opportunities based
upon its analysis of the risk/return tradeoffs. WPC will continue to own
properties as long as it believes ownership helps attain its objectives.
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W. P. CAREY & CO. LLC
WPC presently intends to:
- increase revenues from the management business by increasing assets
under management as the CPA(R) REITs acquire additional property and
organizing new investment entities;
- seek additional investment and other opportunities that leverage
core management skills (which include in-depth credit analysis,
asset valuation and sophisticated structuring techniques)
- optimize the current portfolio of properties through expansion of
existing properties, timely dispositions and favorable lease
modifications;
- utilize its size and access to capital to refinance existing debt;
and
- increase its access to capital.
SIGNIFICANT DEVELOPMENTS DURING 2003
[DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS]
WPC and affiliates structured approximately $725,000 of acquisitions on behalf
of the CPA(R) REITs in 2003, and generated $88,060 of management revenues
In August 2003, CPA(R):15 completed a second "best efforts" public offering
which raised $647,000.
WPC formed CPA(R):16 - Global in June 2003 and in December 2003 commenced a
public offering to raise up to $1,100,000 on a "best efforts" basis, with WPC as
the advisor to CPA(R):16 - Global.
During 2003, WPC reduced the outstanding balance of its credit facility by
$20,000, while additionally paying off $18,203 in mortgage financing on its
Broomfield, Colorado, Williamsport, Pennsylvania, Toledo, Ohio, West Mifflin,
Pennsylvania, Houston, Texas and Pantin, France properties. The mortgage on the
Pantin, France property, which was refinanced in December 2003 for $12,683 (Euro
10,156), had a balance of $7,603 (Euro 6,137) at the time of the refinancing. In
addition, WPC sold nine properties for $34,440 in 2003.
Prior to April 1, 2003, WPC owned a 10% interest in W.P. Carey International LLC
("WPCI"), a company that structures net lease transactions on behalf of the
CPA(R) REITs outside of the United States of America. The remaining 90% interest
in WPCI was owned by William Polk Carey ("Carey"), Chairman and Co-Chief
Executive Officer of WPC. In April 2003, WPC acquired 100% of the ownership of
WPCI through the redemption of Carey's interest on April 1, 2003. WPCI
distributed 492,881 shares of WPC and $1,898 of cash to Carey, equivalent to his
contributions to WPCI. As a result of this transaction, WPC through WPCI has
acquired exclusive rights to structure net lease transactions outside of the
United States of America on behalf of the CPA(R) REITs.
On June 30, 2003, WPCI granted an incentive award to certain officers of WPCI
consisting of 1,500,000 restricted shares, representing an approximate 13%
interest in WPCI, and 1,500,000 options for WPCI common stock with a combined
estimated fair value of $2,485 at that date. Both the options and restricted
stock will vest ratably over five years. The options are exercisable at $1 per
share for a period of ten years. The awards are subject to redemption in 2012 if
certain conditions are met. Any redemption will be subject to an independent
valuation of WPCI. The fair value of these interests at December 31, 2003 was
$1,615.
In November 2003, WPC, through a majority owned subsidiary, completed the
purchase of a 22.5% equity interest in an existing limited liability company,
which owns eight properties located in France, from CPA(R):12 and CPA(R):15 for
a net purchase price of approximately $9,744. The purchase price was based on
the appraised value of the properties, net of mortgage debt. The properties are
leased to affiliates of Carrefour, S.A. The leases have nine-year terms,
expiring from December 2011 to November 2012, and provide for aggregate annual
rent of Euro 11,799 ($14,809 as of December 31, 2003), with annual rent
increases based on a formula indexed to increases in the INSEE, a French
construction cost index. The properties are subject to limited recourse mortgage
financing of Euro 96,697 ($121,422 as of December 31, 2003.) The Carrefour loans
provide for quarterly payments of interest at an annual interest rate of 5.55%
and stated principal payments with scheduled increases over their terms. The
loans mature in December 2014 at which time balloon payments are due.
During June 2003, WPC entered into a purchase and sales agreement to sell its
property in Cincinnati, Ohio for $10,088. The buyer has until December 31, 2004
to complete the purchase.
ACQUISITION STRATEGIES
WPC has a well-developed process with established procedures and systems for
acquiring net leased property for itself and it its capacity as advisor to the
CPA(R) REITs. As a result of its reputation and experience in the industry and
the contacts maintained by its professionals, WPC has a presence in the net
lease market that has provided it with the opportunity to
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W. P. CAREY & CO. LLC
invest in a significant number of transactions on an ongoing basis. In
evaluating opportunities, WPC carefully examines the credit, management and
other attributes of the tenant and the importance of the property under
consideration to the tenant's operations. Careful credit analysis is a crucial
aspect of every transaction. WPC believes that it has one of the most extensive
underwriting processes in the industry and has an experienced staff of
professionals involved with underwriting transactions. WPC seeks to identify
those prospective tenants whose creditworthiness is likely to improve over time.
WPC believes that its experience in structuring sale-leaseback transactions to
meet the needs of a prospective tenant enables it to obtain a higher return for
a given level of risk than would typically be available by purchasing a property
subject to an existing lease.
WPC's strategy in structuring net lease investments is to:
- combine the stability and security of long-term lease payments,
including rent increases, with the appreciation potential inherent
in the ownership of real estate;
- enhance current returns by utilizing varied lease structures;
- reduce credit risk by diversifying investments by tenant, type of
facility, geographic location and tenant industry; and
- increase potential returns by obtaining equity enhancements from the
tenant when possible, such as warrants to purchase tenant common
stock.
FINANCING STRATEGIES
Consistent with its investment policies, WPC uses leverage when available on
favorable terms. WPC has in place a credit facility of up to $225 million, which
it has used and intends to continue to use in connection with acquiring
additional properties, funding build-to-suit projects and refinancing existing
debt. The credit facility has a three-year term through March 2004. As of
December 31, 2003, WPC had $29,000 outstanding under the line of credit and
approximately $180,194 in limited recourse property-level debt outstanding. The
facility has been extended on a short-term basis through June 1, 2004 and will
either be renewed or replaced. WPC continually seeks opportunities and considers
alternative financing techniques to refinance debt, reduce interest expense or
improve its capital structure.
TRANSACTION ORIGINATION
In analyzing potential acquisitions for itself and on behalf of the CPA(R)
REITs, WPC reviews and structures many aspects of a transaction, including the
tenant, the real estate and the lease, to determine whether a potential
acquisition can be structured to satisfy its acquisition criteria. The aspects
of a transaction which are reviewed and structured by WPC include the following:
Tenant Evaluation. WPC evaluates each potential tenant for its credit,
management, position within its industry, operating history and profitability.
WPC seeks tenants it believes will have stable or improving credit. By leasing
properties to these tenants, WPC can generally charge rent that is higher than
the rent charged to tenants with recognized credit and thereby enhance its
current return from these properties as compared with properties leased to
companies whose credit potential has already been recognized by the market.
Furthermore, if a tenant's credit does improve, the value of WPC's or the CPA(R)
REIT's property will likely increase (if all other factors affecting value
remain unchanged). WPC may also seek to enhance the likelihood of a tenant's
lease obligations being satisfied, such as through a letter of credit or a
guaranty of lease obligations from the tenant's corporate parent. This credit
enhancement provides WPC and the CPA(R) REITs with additional financial
security. In evaluating a possible investment, the creditworthiness of a tenant
generally will be a more significant factor than the value of the property
absent the lease with such tenant. While WPC will select tenants it believes are
creditworthy, tenants will not be required to meet any minimum rating
established by an independent credit rating agency. WPC's and the investment
committee's standards for determining whether a particular tenant is
creditworthy vary in accordance with a variety of factors relating to specific
prospective tenants. The creditworthiness of a tenant is determined on a tenant
by tenant, case by case basis. Therefore, general standards for creditworthiness
cannot be applied.
Leases with Increasing Rent. WPC seeks to include a clause in each lease that
provides for increases in rent over the term of the lease. These increases are
generally tied to increases in indices such as the consumer price index. In the
case of retail stores, the lease may provide for participation in gross sales
above a stated level. The lease may also provide for mandated rental increases
on specific dates or other methods that may not be in existence or contemplated
by us as of the date of this report. WPC seeks to avoid entering into leases
that provide for contractual reductions in rents during their primary term.
Properties Important to Tenant Operations. WPC generally seeks to acquire
properties with operations that are essential or important to the ongoing
operations of the tenant. WPC believes that these properties provide better
protection in the event a tenant files for bankruptcy, since leases on
properties essential or important to the operations of a bankrupt tenant are
less likely to be terminated by a bankrupt tenant. WPC also seeks to assess the
income, cash flow and profitability of the business conducted at the property so
that, if the tenant is unable to operate its business, it and the CPA(R) REITs
can either
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W. P. CAREY & CO. LLC
continue operating the business conducted at the property or re-lease the
property to another entity in the industry which can operate the property
profitably.
Lease Provisions that Enhance and Protect Value. When appropriate, WPC attempts
to include provisions in its leases that require its consent to specified tenant
activity or require the tenant to satisfy specific operating tests. These
provisions include, for example, operational and financial covenants of the
tenant, prohibitions on a change in control of the tenant and indemnification
from the tenant against environmental and other contingent liabilities. These
provisions protect WPC and the CPA(R) REITs' investment from changes in the
operating and financial characteristics of a tenant that may impact its ability
to satisfy its obligations to WPC and the CPA(R) REITs or could reduce the value
of their properties.
Diversification. WPC will attempt to diversify its and the CPA(R) REITs'
portfolio to avoid dependence on any one particular tenant, type of facility,
geographic location or tenant industry. By diversifying the portfolios, WPC
reduces the adverse effect of a single under-performing investment or a downturn
in any particular industry or geographic region.
WPC uses a variety of other strategies in connection with its acquisitions.
These strategies include attempting to obtain equity enhancements in connection
with transactions. Typically, these equity enhancements involve warrants to
purchase stock of the tenant or the stock of the parent of the tenant. If the
value of the stock exceeds the exercise price of the warrant, equity
enhancements help WPC and the CPA(R) REITs to achieve their goal of increasing
funds available for the payment of distributions.
As a transaction is structured, it is evaluated by the chairman of WPC's
investment committee. Before a property is acquired, the transaction is reviewed
by the investment committee to ensure that it satisfies WPC's and the CPA(R)
REIT's investment criteria. The investment committee is not directly involved in
originating or negotiating potential acquisitions, but instead functions as a
separate and final step in the acquisition process. WPC places special emphasis
on having experienced individuals serve on its investment committee and does not
invest in a transaction unless it is approved by the investment committee.
WPC believes that the investment committee review process gives it a unique
competitive advantage over other net lease companies because of the substantial
experience and perspective that the investment committee has in evaluating the
blend of corporate credit, real estate and lease terms that combine to make an
acceptable risk.
The following people serve on the investment committee:
- George E. Stoddard, Chairman, was formerly responsible for the
direct corporate investments of The Equitable Life Assurance Society
of the United States and has been involved with the CPA(R) programs
for over 20 years.
- Frank J. Hoenemeyer, Vice Chairman, was formerly Vice Chairman,
Director and Chief Investment Officer of The Prudential Insurance
Company of America. As Chief Investment Officer, Mr. Hoenemeyer was
responsible for all of Prudential's investments, including stocks,
bonds, private placements, real estate and mortgages.
- Nathaniel S. Coolidge previously served as Senior Vice President --
Head of Bond & Corporate Finance Department of the John Hancock
Mutual Life Insurance Company. His responsibility included
overseeing fixed income investments for Hancock, its affiliates and
outside clients.
- Lawrence R. Klein is the Benjamin Franklin Professor of Economics
Emeritus at the University of Pennsylvania and its Wharton School.
Dr. Klein has been awarded the Alfred Nobel Memorial Prize in
Economic Sciences and currently advises various governments and
government agencies.
- Ralph F. Verni, is a private investor and business consultant and
formerly Chief Investment Officer of The New England Mutual Life
Insurance Company.
- Karsten von Koller, was formerly Chairman and Member of the Board of
Managing Directors of Eurohypo AG, the leading commercial real
estate financing company in Europe.
ASSET MANAGEMENT
WPC believes that effective management of net lease assets is essential to
maintain and enhance property values. Important aspects of asset management
include restructuring transactions to meet the evolving needs of current
tenants, re-leasing properties, refinancing debt, selling properties and
knowledge of the bankruptcy process.
WPC monitors, on an ongoing basis, compliance by tenants with their lease
obligations and other factors that could affect the financial performance of any
of its properties. Monitoring involves receiving assurances that each tenant has
paid real estate taxes, assessments and other expenses relating to the
properties it occupies and confirming that appropriate insurance coverage is
being maintained by the tenant. WPC reviews financial statements of its tenants
and undertakes regular physical
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W. P. CAREY & CO. LLC
inspections of the condition and maintenance of its properties. Additionally,
WPC periodically analyzes each tenant's financial condition, the industry in
which each tenant operates and each tenant's relative strength in its industry.
COMPETITION
WPC faces competition for the acquisition of commercial properties in general,
and such properties net leased to major corporations in particular, from
insurance companies, credit companies, pension funds, private individuals,
investment companies and CPA(R) REITs. WPC also faces competition from
institutions that provide or arrange for other types of commercial financing
through private or public offerings of equity or debt or traditional bank
financings. WPC believes its management's experience in real estate, credit
underwriting and transaction structuring will allow it to compete effectively
for office and industrial properties.
ENVIRONMENTAL MATTERS
Under various federal, state and local environmental laws, regulations and
ordinances, current or former owners of real estate, as well as other parties,
may be required to investigate and clean up hazardous or toxic chemicals,
substances or waste or petroleum product or waste, releases on, under, in or
from a property. These parties may be held liable to governmental entities or to
third parties for specified damages and for investigation and cleanup costs
incurred by these parties in connection with the release or threatened release
of hazardous materials. These laws typically impose responsibility and liability
without regard to whether the owner knew of or was responsible for the presence
of hazardous materials, and the liability under these laws has been interpreted
to be joint and several under some circumstances. WPC's leases often provide
that the tenant is responsible for all environmental liability and for
compliance with environmental regulations relating to the tenant's operations.
WPC typically undertakes an investigation of potential environmental risks when
evaluating an acquisition. Phase I environmental assessments are performed by
independent environmental consulting and engineering firms for all properties
acquired by WPC and the CPA(R) REITs. Where warranted, Phase II environmental
assessments are performed. Phase I assessments do not involve subsurface
testing, whereas Phase II assessments involve some degree of soil and/or
groundwater testing. WPC or the CPA(R) REITs may acquire a property which is
known to have had a release of hazardous materials in the past, subject to a
determination of the level of risk and potential cost of remediation. WPC and
the CPA(R) REITs normally require property sellers to indemnify them fully
against any environmental problem existing as of the date of purchase.
Additionally, WPC often structures leases to require the tenant to assume most
or all responsibility for compliance with the environmental provisions of the
lease or environmental remediation relating to the tenant's operations and to
provide that non-compliance with environmental laws is a lease default. In some
cases, WPC may also require a cash reserve, a letter of credit or a guarantee
from the tenant, the tenant's parent company or a third party to assure lease
compliance and funding of remediation. The value of any of these protections
depends on the amount of the collateral and/or financial strength of the entity
providing the protection. Such a contractual arrangement does not eliminate
statutory liability or preclude claims against WPC and the CPA(R) REITs by
governmental authorities or persons who are not a party to the arrangement.
Contractual arrangements in leases may provide a basis for WPC and the CPA(R)
REITs to recover from the tenant damages or costs for which it has been found
liable.
Some of the properties are located in urban and industrial areas where fill or
current or historic industrial uses of the areas may have caused site
contamination at the properties. In addition, WPC is aware of environmental
conditions at certain of the properties that require some degree of remediation.
All such environmental conditions are primarily the responsibility of the
respective tenants under their leases. WPC, with assistance from consultants,
estimates that the majority of the aggregate cost of addressing environmental
conditions known to require remediation at the properties is covered by existing
letters of credit and corporate guarantees. WPC believes that the tenants are
taking or will soon be taking all required remedial action with respect to any
material environmental conditions at the properties. However, WPC and the CPA(R)
REITs could be responsible for some or all of these costs if one or more of the
tenants fails to perform its obligations or to indemnify WPC and the CPA(R)
REITs, as applicable. Furthermore, no assurance can be given that the
environmental assessments that have been conducted at the properties disclosed
all environmental liabilities, that any prior owner did not create a material
environmental condition not known to the Company, or that a material condition
does not otherwise exist as to any of the properties.
OPERATING SEGMENTS
WPC operates in two operating segments, real estate operations, with investments
in the United States and Europe, and management operations. For the year ended
December 31, 2003, no lessee represented 10% or more of the total lease revenues
of WPC. The management operations derives substantially all of its revenues from
the affiliated CPA(R) REITs.
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W. P. CAREY & CO. LLC
FACTORS AFFECTING FUTURE OPERATING RESULTS
The provisions of the Private Securities Litigation Reform Act of 1995 (the
"Act") became effective in December 1995. The Act provides a "safe harbor" for
companies which make forward-looking statements providing prospective
information. The "safe harbor" under the Act relates to protection for companies
with respect to litigation filed on the basis of such forward-looking
statements.
WPC wishes to take advantage of the "safe harbor" provisions of the Act and is
therefore including this section in its Annual Report on Form 10-K. The
statements contained in this Annual Report, if not historical, are
forward-looking statements and involve risks and uncertainties which are
described below that could cause actual results to differ materially from the
results, financial or otherwise, or other expectations described in such
forward-looking statements. These statements are identified with the words
"anticipated," "expected," "intends," "seeks" or "plans" or words of similar
meaning. Therefore, forward-looking statements should not be relied upon as a
prediction of actual future results or occurrences.
Future results may be affected by certain risks and uncertainties including the
following:
The revenue streams from the investment advisory agreements with the CPA(R)
REITs are subject to limitation or cancellation.
The agreements under which we provide investment advisory services may generally
be terminated by each CPA(R) REIT upon 60 days notice, with or without cause. In
addition, the fees payable under each agreement are subject to a variable annual
cap based on a formula tied to the assets and income of that CPA(R) REIT. This
cap may limit the growth of the management fees. There can be no assurance that
these agreements will not be terminated or that our income will not be limited
by the cap on fees payable under the agreements. The elimination of or any cap
on fees could have a material adverse effect on our business, results of
operations and financial condition.
Our advisory business exposes us to more volatility in earnings than our real
estate investment business.
The growth in revenue from the management business is dependent in large part on
future capital raising in existing or future managed entities and our ability to
invest the money accordingly, which is subject to uncertainty and is subject to
capital market and real estate market conditions. This uncertainty can create
more volatility in our earnings because of the resulting increased volatility in
transaction based fee revenue from the real estate advisory and management
business as compared to historic revenue from ownership of real estate subject
to triple net leases, which historically has been less volatile.
The inability of a tenant in a single tenant property to pay rent will reduce
our revenues.
We expect that most of our properties and those of the CPA(R) REITs will each be
occupied by a single tenant and, therefore, the success of the investments is
materially dependent on the financial stability of such tenants. Lease payment
defaults by tenants could cause us to reduce the amount of distributions to
shareholders, either from a direct loss of revenue or reduced fees payable by
the CPA(R) REITs. In the event of a default, we and the CPA(R) REITs may
experience delays in enforcing their rights as landlord and may incur
substantial costs in protecting the investment and reletting the property. If a
lease is terminated, there is no assurance that we or the CPA(R) REITs will be
able to lease the property for the rent previously received or sell the property
without incurring a loss.
We depend on major tenants.
Revenues from several of our tenants and/or their guarantors constitute a
significant percentage of our consolidated rental revenues. Our five largest
tenants/guarantors, which occupy 10 properties, represented approximately 27% of
total real estate rental revenues. The default, financial distress or bankruptcy
of any of the tenants of these properties could cause interruptions in the
receipt of lease revenues from these tenants and/or result in vacancies in the
respective properties, which would reduce our revenues until the affected
property is re-let, and could decrease the ultimate sale value of each such
property.
If our tenants are highly leveraged, they may have a higher possibility of
filing for bankruptcy.
Of tenants that experience downturns in their operating results due to adverse
changes to their business or economic conditions, those that are highly
leveraged may have a higher possibility of filing for bankruptcy. In bankruptcy,
a tenant has the option of vacating a property instead of paying rent. Until
such a property is released from bankruptcy, our revenues
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W. P. CAREY & CO. LLC
would be reduced and could cause us to reduce distributions to shareholders. We
have highly leveraged tenants at this time, and we may have additional highly
leveraged tenants in the future.
The bankruptcy of tenants may cause a reduction in revenue.
Bankruptcy of a tenant could cause:
- the loss of lease payments;
- an increase in the costs incurred to carry the property;
- a reduction in the value of shares; and
- a decrease in distributions to shareholders.
Under bankruptcy law, a tenant who is the subject of bankruptcy proceedings has
the option of continuing or terminating any unexpired lease. If the tenant
terminates the lease, any claim we have for breach of the lease (excluding
collateral securing the claim) will be treated as a general unsecured claim. The
maximum claim will be capped at the amount owed for unpaid rent prior to the
bankruptcy unrelated to the termination, plus the greater of one year's lease
payments or 15% of the remaining lease payments payable under the lease (but no
more than three years' lease payments). In addition, due to the long-term nature
of our leases and terms which may provide an option to purchase a property by
the tenant, a bankruptcy court could recharacterize a net lease transaction as a
secured lending transaction. If that were to occur, we would not be treated as
the owner of the property, but might have additional rights as a secured
creditor.
We and the CPA(R) REITs have had tenants file for bankruptcy protection and are
involved in litigation. Four of the prior thirteen CPA(R) funds reduced the rate
of distributions to their investors as a result of adverse developments
involving tenants.
Our tenants generally do not have a recognized credit rating, which may create a
higher risk of lease defaults and therefore lower revenues than if our tenants
had a recognized credit rating.
Generally, no credit rating agencies evaluate or rank the debt or the credit
risk of our tenants, as we seek tenants that we believe will have improving
credit profiles. Our long-term leases with certain of these tenants may
therefore pose a higher risk of default than would long term leases with tenants
whose credit potential has already been recognized by the market.
We can borrow a significant amount of funds. The CPA(R) REITs may also borrow a
significant amount of funds.
We have incurred, and may continue to incur, indebtedness (collateralized and
unsecured) in furtherance of our activities. Neither our operating agreement nor
any policy statement formally adopted by our board of directors limits either
the total amount of indebtedness or the specified percentage of indebtedness
(based upon our total market capitalization) which may be incurred. Accordingly,
we could become more highly leveraged, resulting in increased risk of default on
our obligations and in an increase in debt service requirements which could
adversely affect our financial condition and results of operations and our
ability to pay distributions. Our current unsecured revolving credit facility
contains various covenants which limit the amount of secured and unsecured
indebtedness we may incur.
Each of the CPA(R) REITs we advise and manage may also incur significant debt.
This significant debt load could restrict their ability to pay fees owed to us
when due, due to either liquidity problems or restrictive covenants contained in
their borrowing agreements.
We may not be able to refinance balloon payments on our mortgage debts.
Some of our financing may require us to make a lump-sum or "balloon" payment at
maturity. Our ability to make any balloon payment is uncertain and may depend
upon our ability to obtain additional financing or our ability to sell the
property. At the time the balloon payment is due, we may or may not be able to
refinance the balloon payment on terms as favorable as the original loan or sell
the property at a price sufficient to make the balloon payment. A refinancing or
sale could affect the rate of return to shareholders and the projected time of
disposition of our assets. Scheduled balloon payments, including our pro rata
share of mortgages on equity investments, for the next five years are as
follows:
2004 - $14.9 million; 2005 - $0 million; 2006 - $24 million; 2007 - $6 million;
and 2008 - $0 million
Our credit facility, which was scheduled to mature in March 2004 has been
extended on a short-term basis through June 1, 2004 and will either be renewed
or replaced. As of December 31, 2003, we had $29,000 drawn from the line of
credit. Our ability to make balloon payments on debt will depend upon our
ability either to refinance the obligation when due, invest additional equity in
the property or to sell the related property. Our ability to accomplish these
goals will be affected by
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W. P. CAREY & CO. LLC
various factors existing at the relevant time, such as the state of the national
and regional economies, local real estate conditions, available mortgage rates,
our equity in the mortgaged properties, our financial condition, the operating
history of the mortgaged properties and tax laws.
International investments involve additional risks.
We and the CPA(R) REITs may purchase property located outside the United States.
These investments may be affected by factors peculiar to the laws of the
jurisdiction in which the property is located. These laws may expose us to risks
that are different from and in addition to those commonly found in the United
States. Foreign investments could be subject to the following risks:
- changing governmental rules and policies;
- enactment of laws relating to the foreign ownership of property and
laws relating to the ability of foreign persons or corporations to
remove profits earned from activities within the country to the
person's or corporation's country of origin;
- variations in the currency exchange rates;
- adverse market conditions caused by changes in national or local
economic conditions;
- changes in relative interest rates;
- change in the availability, cost and terms of mortgage funds
resulting from varying national economic policies;
- changes in real estate and other tax rates and other operating
expenses in particular countries;
- changes in land use and zoning laws; and
- more stringent environmental laws or changes in such laws.
We may incur costs to finish build-to-suit properties.
We and the CPA(R) REITs may sometimes acquire undeveloped or partially developed
land parcels for the purpose of owning to-be-built facilities for a prospective
tenant. Oftentimes, completion risk, cost overruns and on-time delivery are the
obligations of the prospective tenant. To the extent that the tenant or the
third-party developer experiences financial difficulty or other complications
during the construction process we or the CPA(R) REIT may be required to incur
project costs to complete all or part of the project within a specified time
frame. The incurrence of these costs or the non-occupancy by the tenant may
reduce the project's and our portfolio returns.
We may have difficulty selling or re-leasing our properties.
Real estate investments are relatively illiquid compared to most financial
assets and this illiquidity will limit our ability to quickly change our
portfolio in response to changes in economic or other conditions. The net leases
we or the CPA(R) REITs may enter into or acquire may be for properties that are
specially suited to the particular needs of the tenant. With these properties,
if the current lease is terminated or not renewed, we or the CPA(R) REITs may be
required to renovate the property or to make rent concessions in order to lease
the property to another tenant. In addition, in the event we or the CPA(R) REITs
are forced to sell the property, it may be difficult to sell to a party other
than the tenant due to the special purpose for which the property may have been
designed. These and other limitations may affect the ability to sell properties
without adversely affecting returns to shareholders. Our own scheduled lease
expirations, as a percentage of annualized rental revenues for the next five
years, are as follows:
2004 - 3.2%; 2005 - 4.1%; 2006 - 4.8%; 2007 - 2.2%; and 2008 -4.1%.
Our participation in joint ventures creates additional risk.
We may participate in joint ventures or purchase properties jointly with other
entities, some of which may be unaffiliated with us. There are additional risks
involved in these types of transactions. These risks include the potential of
our joint venture partner becoming bankrupt and the possibility of diverging or
inconsistent economic or business interests of us and our partner. These
diverging interests could result in, among other things, exposing us to
liabilities of the joint venture in excess of our proportionate share of these
liabilities. The partition rights of each owner in a jointly owned property
could reduce the value of each portion of the divided property. In addition, the
fiduciary obligation that we or our board may owe to our partner in an
affiliated transaction may make it more difficult for us to enforce our rights.
We do not fully control the management of our properties.
The tenants or managers of net lease properties are responsible for maintenance
and other day-to-day management of the properties. Because our revenues are
largely derived from rents and advisory fees, which in turn, are derived from
rents collected by the CPA(R) REITs, our financial condition is dependent on the
ability of net lease tenants to operate the properties successfully. If tenants
are unable to operate the
-8-
W. P. CAREY & CO. LLC
properties successfully, the tenants may not be able to pay their rent, which
could adversely affect our financial condition.
We are subject to possible liabilities relating to environmental matters.
We own industrial and commercial properties and are subject to the risk of
liabilities under federal, state and local environmental laws. These
responsibilities and liabilities also exist for properties owned by the CPA(R)
REITs and in the event they become liable for these costs, their ability to pay
our fees could be materially affected. Some of these laws could impose the
following on us:
- Responsibility and liability for the cost of investigation and
removal or remediation of hazardous substances released on our
property, generally without regard to our knowledge or
responsibility of the presence of the contaminants;
- Liability for the costs of investigation and removal or remediation
of hazardous substances at disposal facilities for persons who
arrange for the disposal or treatment of such substances; and
- Potential liability for common law claims by third parties based on
damages and costs of environmental contaminants.
- Being sued by the CPA(R) REITs for inadequate due diligence.
We may be unable to make acquisitions on an advantageous basis.
A significant element of our business strategy is the enhancement of our
portfolio and the CPA(R) REIT portfolios through acquisitions of additional
properties. The consummation of any future acquisition will be subject to
satisfactory completion of our extensive analysis and due diligence review and
to the negotiation of definitive documentation. There can be no assurance that
we will be able to identify and acquire additional properties or that we will be
able to finance acquisitions in the future. In addition, there can be no
assurance that any such acquisition, if consummated, will be profitable for us
or the CPA(R) REITs. If we are unable to consummate the acquisition of
additional properties in the future, there can be no assurance that we will be
able to increase the cash available for distribution to our shareholders, either
through net income on properties we own or through net income generated by the
advisory business.
We may suffer uninsured losses.
There are certain types of losses (such as due to wars or some natural
disasters) that generally are not insured because they are either uninsurable or
not economically insurable. Should an uninsured loss or a loss in excess of the
limits of our insurance occur, we could lose capital invested in a property, as
well as the anticipated future revenues from a property, while remaining
obligated for any mortgage indebtedness or other financial obligations related
to the property. Any such loss would adversely affect our financial condition.
Changes in market interest rates could cause our stock price to go down.
The trading prices of equity securities issued by real estate companies have
historically been affected by changes in broader market interest rates, with
increases in interest rates resulting in decreases in trading prices, and
decreases in interest rates resulting in increases in such trading prices. An
increase in market interest rates could therefore adversely affect the trading
prices of any equity securities issued by us. The stock price could be affected
by factors other than changes in interest rates.
We face intense competition.
We face competition for the acquisition of office and industrial properties in
general, and such properties not leased to major corporations in particular,
from insurance companies, credit companies, pension funds, private individuals,
investment companies and other REITs. We also face competition from institutions
that provide or arrange for other types of commercial financing through private
or public offerings of equity or debt or traditional bank financings.
The value of our real estate is subject to fluctuation.
We are subject to all of the general risks associated with the ownership of real
estate. In particular, we face the risk that rental revenue from the properties
will be insufficient to cover all corporate operating expenses and debt service
payments on indebtedness we incur. Additional real estate ownership risks
include:
- Adverse changes in general or local economic conditions,
- Changes in supply of or demand for similar or competing properties,
- Changes in interest rates and operating expenses,
-9-
W. P. CAREY & CO. LLC
- Competition for tenants,
- Changes in market rental rates,
- Inability to lease properties upon termination of existing leases,
- Renewal of leases at lower rental rates,
- Inability to collect rents from tenants due to financial hardship,
including bankruptcy,
- Changes in tax, real estate, zoning and environmental laws that may
have an adverse impact upon the value of real estate,
- Uninsured property liability, property damage or casualty losses,
- Unexpected expenditures for capital improvements or to bring
properties into compliance with applicable federal, state and local
laws, and
- Acts of God and other factors beyond the control of our management.
We depend on key personnel for our future success.
We depend on the efforts of the executive officers and key employees. The loss
of the services of these executive officers and key employees could have a
material adverse effect on our operations.
WPC's business, results of operations or financial condition could be materially
adversely affected by the above conditions. The risk factors may have affected,
and in the future could affect, WPC's actual operating and financial results and
could cause such results to differ materially from those in any forward-looking
statements. You should not consider this list exhaustive. New risk factors
emerge periodically, and the Company cannot completely assure you that the
factors described above list all material risks to WPC at any specific point in
time. The Company has disclosed many of the important risk factors discussed
above in its previous filings with the Securities and Exchange Commission.
-10-
W. P. CAREY & CO. LLC
Item 2. Properties.
Set forth below is certain information relating to the Company's properties
owned as of December 31, 2003:
LEASE OBLIGOR/ RENT PER SHARE OF CURRENT INCREASE
LOCATION SQUARE FOOTAGE SQUARE FOOT ANNUAL RENTS(a) FACTOR LEASE TERM MAXIMUM TERM
------------- -------------- ----------- --------------- -------- ---------- ------------
DR PEPPER BOTTLING COMPANY OF TEXAS
Irving and Houston, Texas 721,947 6.20 4,474,721 CPI Jun. 2014 Jun. 2029
DETROIT DIESEL CORPORATION(b)
Detroit, MI 2,730,750 1.52 4,157,524 PPI Jun. 2020 Jun. 2040
GIBSON GREETINGS, INC.
Berea, KY and Cincinnati, OH 1,194,840 3.11 3,720,000 Stated Nov. 2013 Nov. 2023
BOUYGUES TELECOM SA(b)
Tours, France 107,618 13.47 1,377,036(h) INSEE(i) Sep. 2009 Sep. 2012
Illkirch, France 107,639 27.16 2,192,926(r) INSEE(i) Jul. 2013 Jul. 2013
------- ---------
Total: 215,257 3,569,962
SOCIETE LOGIDIS AND SOCIETE CV LOGISTIQUE (CARREFOUR FRANCE, SA AND CARREFOUR HYPERMARCHES FRANCE, SA) (b)(c)
Cholet, Ploufragan, Colomiers, Crepy en
Vallois, Lens, Nimes (2), and Thuit
Hebert, France 2,940,004 4.50 2,975,629 INSEE Various None
FEDERAL EXPRESS CORPORATION
College Station, TX 12,080 5.51 66,600 Stated Apr. 2007 Apr. 2009
Colliersville, TN (b)(e) 390,380 17.02 2,657,852 CPI Aug. 2019 Aug. 2029
Corpus Christi, TX 30,212 6.55 197,896 Stated May 2007 May 2017
------- ---------
Total: 432,672 2,922,348
AMERICA WEST HOLDINGS CORPORATION(b)(d)
Tempe, AZ 225,114 16.90 2,837,889 CPI Apr. 2014 Apr. 2024
QUEBECOR PRINTING INC.
Doraville, GA (b) 432,559 3.52 1,522,498 CPI Dec. 2009 Dec. 2034
Olive Branch, MS (b) 285,500 4.16 1,186,578 Fixed Jun. 2008 Jun. 2033
------- ---------
Total: 718,059 2,709,076
ORBITAL SCIENCES CORPORATION(b)
Chandler, AZ 335,307 7.92 2,655,320 CPI Sep. 2009 Sep. 2029
AUTOZONE, INC.(b) (g)
31 Locations :
NC, TX, AL, GA, IL, LA, MO 175,730 7.52 1,321,567 % Sales Feb. 2011 Feb. 2026
11 Locations:
FL, GA, NM, SC, TX 54,000 9.71 524,388 % Sales Aug. 2013 Aug. 2038
12 Locations :
FL, LA, MO, NC, TN 72,500 5.11 370,636 % Sales Various Various
------- ---------
Total: 302,230 2,216,591
SYBRON INTERNATIONAL CORPORATION
Dubuque, IA; Portsmouth, NH and
Rochester, NY 494,100 4.38 2,163,816 CPI Dec. 2013 Dec. 2038
CHECKFREE HOLDINGS, INC.(o)( b)
Norcross, GA 220,675 19.29 2,128,372 CPI Dec. 2015 Dec. 2030
LIVHO, INC.
Livonia, MI 158,000 11.39 1,800,000 Stated Dec. 2004 Jan. 2008
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W. P. CAREY & CO. LLC
LEASE OBLIGOR/ RENT PER SHARE OF CURRENT INCREASE
LOCATION SQUARE FOOTAGE SQUARE FOOT ANNUAL RENTS(a) FACTOR LEASE TERM MAXIMUM TERM
------------- -------------- ----------- --------------- -------- ---------- ------------
UNISOURCE WORLDWIDE, INC.
Anchorage, AK 44,712 7.34 328,360 Stated Dec. 2009 Dec. 2029
Commerce, CA(b) 411,561 3.46 1,422,080 Stated Apr. 2010 Apr. 2030
------- ---------
Total: 456,273 1,750,440
CSS INDUSTRIES, INC.
Memphis, TN 1,006,566 1.72 1,735,352 CPI Dec. 2005 Dec. 2015
INFORMATION RESOURCES, INC.(b) (f)
Chicago, IL 252,000 19.58 1,643,604 CPI Oct. 2010 Oct. 2015
VARIOUS TENANTS
Bloomingdale, IL 102,236 15.83 1,618,451 Various Various Various
BRODART CO.
Williamsport, PA (2) 521,240 3.30 1,720,686 CPI Jun. 2008 Jun. 2028
SYBRON DENTAL SPECIALTIES, INC.
Glendora, CA and Romulus, MI 245,000 6.59 1,613,096 CPI Dec. 2018 Dec. 2043
BE AEROSPACE, INC.(b)
Lenexa, KS 130,094 4.61 599,674 Stated Sep. 2017 Sep. 2037
Winston-Salem, NC 274,216 2.66 728,320 Stated Sep. 2017 Sep. 2037
Dallas, TX 22,680 5.04 114,224 Stated Sep. 2017 Sep. 2037
------- ---------
Total: 426,990 1,442,218
SPRINT SPECTRUM L.P.(b)
Albuquerque, NM 94,731 15.04 1,424,561 Stated May 2011 May 2021
EAGLE HARDWARE & Garden, Inc.(b)(g)
CPI &
Bellevue, WA 127,360 10.06 1,281,273 % Sales Aug. 2018 Aug. 2018
BELLSOUTH TELECOMMUNICATIONS, INC.(b)
Lafayette Parish, LA 64,803 16.92 1,096,170 Stated Dec. 2009 Dec. 2039
AT&T Corporation
Bridgeton, MO 85,510 14.14 1,209,048 Stated Jun. 2011 Jun. 2021
PANTIN, FRANCE - MULTI-TENANT(b) 69,211 22.41 1,163,165(j) INSEE(i) Various Various
HOLOGIC, INC. (b) (q)
Danbury, CT 62,042 9.42 210,526 CPI Aug. 2022 Aug. 2042
Bedford, MA 207,000 12.42 925,612 CPI Aug. 2022 Aug. 2042
------- ---------
Total: 269,042 1,136,138
CENDANT OPERATION, INC.(b)
Moorestown, NJ 65,567 17.11 1,121,792 Stated Jun. 2004 Jun. 2004
ANTHONY'S MANUFACTURING COMPANY, INC.
CPI/
San Fernando, CA 182,845 5.57 1,019,047 Market May 2007 May 2012
WAL-MART STORES, INC.
West Mifflin, PA 118,125 8.05 950,905 CPI Jan. 2007 Jan. 2037
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W. P. CAREY & CO. LLC
LEASE OBLIGOR/ RENT PER SHARE OF CURRENT INCREASE
LOCATION SQUARE FOOTAGE SQUARE FOOT ANNUAL RENTS(a) FACTOR LEASE TERM MAXIMUM TERM
------------- -------------- ----------- --------------- -------- ---------- ------------
UNITED STATIONERS SUPPLY COMPANY
New Orleans, LA; Memphis, TN and San
Antonio, TX 197,098 4.64 915,834 CPI Mar. 2010 Mar. 2030
SWAT-FAME, INC.
City of Industry, CA 220,401 4.19 923,477 CPI Dec. 2010 Dec. 2020
PRE FINISH METALS INCORPORATED
Walbridge, OH 313,704 2.84 892,091 CPI Jun. 2008 Jun. 2028
LOCKHEED MARTIN CORPORATION
King of Prussia, PA 84,926 9.39 797,202 Stated Jul. 2008 Jul. 2013
NVR L.P.
Thurmont, MD and
Farmington, NY 179,741 4.30 773,370 CPI Mar. 2014 Mar. 2039
AMS HOLDING GROUP
College Station, TX 52,552 14.56 765,101 Fixed Dec. 2004 Dec. 2009
LOCKHEED MARTIN CORPORATION 30,176 9.30 280,560 Stated Dec. 2007 Jul. 2009
UNITED SPACE ALLIANCE LLC 52,754 8.70 458,948 Stated Feb. 2005 Apr. 2011
------- ---------
Total for property in
Houston, TX: (b) 82,930 739,508
FAURECIA EXHAUST SYSTEMS, INC.
Toledo, OH 61,000 5.51 336,000 CPI Nov. 2022 Nov. 2042
STAR CARTAGE 10,000 3.00 30,000 Stated Mar. 2004 Mar. 2004
FAURECIA EXHAUST SYSTEMS, INC. 350,000 1.06 371,000 Stated Nov. 2005 Nov. 2007
------- -------
Toledo, OH(s)
Total for properties in
Toledo, OH: 421,000 737,000
EXIDE ELECTRONICS CORPORATION
Raleigh, NC 27,770 23.22 644,937 CPI Jul. 2006 Jul. 2031
WINN-DIXIE STORES, INC.(g)
Bay Minette, AL 34,887 3.68 128,470 % Sales Jun. 2007 Jun. 2032
Brewton, AL 30,625 4.39 134,500 % Sales Oct. 2010 Oct. 2030
Leeds, AL 26,470 5.47 144,713 % Sales Feb. 2004 Feb. 2034
Montgomery, AL 32,690 5.86 191,534 % Sales Mar. 2008 Mar. 2038
------- -------
Total: 124,672 599,217
EXEL COMMUNICATIONS, INC.
Reno, NV 53,158 10.93 580,800 Stated Dec. 2006 Dec. 2016
WESTERN UNION FINANCIAL SERVICES, INC.
Bridgeton, MO 78,080 7.34 573,221 Stated Nov. 2006 Nov. 2011
DS GROUP LIMITED
Goshen, IN 52,000 10.84 563,715 CPI Feb. 2010 Feb. 2035
UNITED SPACE ALLIANCE LLC 88,200 5.73 505,020 STATED SEP. 2006 SEP. 2016
FACILITY MANAGEMENT SOLUTIONS, LLC 3,600 8.40 30,240 Stated Dec. 2005 Dec. 2005
------ -------
Webster, TX 91,800 535,260
-13-
W. P. CAREY & CO. LLC
LEASE OBLIGOR/ RENT PER SHARE OF CURRENT INCREASE
LOCATION SQUARE FOOTAGE SQUARE FOOT ANNUAL RENTS(a) FACTOR LEASE TERM MAXIMUM TERM
------------- -------------- ----------- --------------- -------- ---------- ------------
TITAN CORPORATION (K)
San Diego, CA 166,403 17.20 530,627 CPI Jul. 2007 Jul. 2032
SOCIETE DE TRAITEMENTS 69,493 4.84 268,891(m) INSEE(i) May 2005 May 2008
DSM FOOD SPECIALITIES 37,337 7.83 233,868(m) INSEE(i) May 2008 May 2008
------- -------
Total for properties in Joue
Les Tours and Phalempin, France: (b) 106,830 502,759
TELLIT ASSURANCES(b)
Rouen, France 36,791 18.10 499,346(j) INSEE(i) Aug. 2010 Aug. 2010
BELLSOUTH ENTERTAINMENT, INC.
Ft. Lauderdale, FL 80,450 6.18 497,181 Fixed Jun. 2009 Jun. 2019
CHILDTIME CHILDCARE, INC.(b)(l)
12 Locations: AZ, CA, MI, TX 83,912 16.59 472,307 CPI Jan. 2016 Jan. 2041
YALE SECURITY, INC.
Lemont, IL 113,133 4.06 459,000 Stated Mar. 2011 Mar. 2011
HONEYWELL, INC. 119,320 2.03 242,400 Stated Sep. 2005 Sep. 2005
CONTINENTAL AIRLINES, INC. 25,125 5.96 149,688 Stated Jul. 2008 Jul. 2008
------- -------
Total for 2 properties in
Houston, TX: 144,445 392,088
OLMSTEAD KIRK PAPER COMPANY 5,760 6.56 37,800 Stated Dec. 2007 Dec. 2007
INDUSTRIAL DATA SYSTEMS CORPORATION
(PETROCON ENGINEERING, INC.) 42,880 8.16 349,900 Stated Dec. 2011 Dec. 2014
------ -------
Total for property in
Beaumont, TX: 48,640 387,700
BIKE BARN HOLDING COMPANY, INC. 6,216 10.42 64,800 Stated Aug. 2005 Aug. 2015
SEARS ROEBUCK AND CO. 21,069 10.60 223,331 Stated Sep. 2005 Sep. 2015
------ -------
Total for property in
Houston, TX: 27,285 288,131
ALSTOM POWER, INC.(b)
Erlanger, KY 118,200 2.43 287,226 Stated May 2013 May 2013
TOOLING SYSTEMS, LLC
Frankenmuth, MI 128,400 2.21 283,451 Stated Aug. 2012 Aug. 2017
VARIOUS TENANTS
Broomfield, CO 67,699 4.36 295,257 Various Various Various
THE ROOF CENTERS, INC.
Manassas, VA 60,446 4.51 272,660 Stated Jul. 2009 Jul. 2009
GAMES WORKSHOP, INC.
Glen Burnie, MD 45,300 5.99 271,185 CPI Apr. 2006 Apr. 2016
NORTHERN TUBE, INC.
Pinconning, MI 220,588 1.15 254,538 CPI Jul. 2013 Jul. 2023
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W. P. CAREY & CO. LLC
LEASE OBLIGOR/ RENT PER SHARE OF CURRENT INCREASE
LOCATION SQUARE FOOTAGE SQUARE FOOT ANNUAL RENTS(a) FACTOR LEASE TERM MAXIMUM TERM
------------- -------------- ----------- --------------- -------- ---------- ------------
DIRECTION REGIONAL DES AFFAIRES
SANITAIRES ET SOCIALES
Rouen, France (b) 25,618 13.03 246,547(j) INSEE(i) Mar. 2006 Mar. 2006
ADR BOOKPRINT INC. 3,330 7.56 25,176 Stated Feb. 2004 Feb. 2004
TRANS AMERICAN AUTOMATION INC. 5,632 7.92 44,604 Stated Feb. 2007 Feb. 2012
CUSTOM TRAINING GROUP, INC. 11,704 8.50 99,480 Stated Aug. 2006 Aug. 2006
RICHARD MILBURN ACADEMY 7,860 7.57 59,520 Stated Sep. 2008 Sep. 2008
WORK READY, INC. 7,306 9.66 70,560 Stated Aug. 2006 Aug. 2006
------ -------
Total for property in
Houston, TX: 35,832 299,340
PENBERTHY PRODUCTS, INC.
Prophetstown, IL 161,878 1.47 237,486 CPI Apr. 2006 Apr. 2026
VERIZON COMMUNICATIONS, INC.
Milton, VT 30,624 6.81 208,467 Stated Feb. 2013 Feb. 2023
ROCHESTER BUTTON COMPANY, INC.
South Boston and Kenbridge, VA 81,387 2.21 180,000 None Dec. 2016 Dec. 2036
PEPSI BOTTLING GROUP, LLC
Houston, TX 17,725 6.29 111,557 Stated Oct. 2004 Oct. 2004
PENN VIRGINIA COAL COMPANY
Duffield, VA 15,444 4.79 74,000 CPI Nov. 2004 Nov. 2019
SHINN SYSTEMS, INC. (n)
Salisbury, NC 13,284 2.00 26,568 Fixed Nov. 2006 Nov. 2006
VACANT PROPERTIES
McMinnville, TN 209,204
Cincinnati, OH(t) 597,996
City of Industry, CA 119,480
Salisbury, NC 298,681
Toledo, Ohio 764,000
Panama City, FL 33,837
Garland, TX 153,622
Webster, TX 25,648
Travelers Rest, SC 181,700
Broomfield, CO 34,086
Broomfield, CO (p) 12.5 acres Land Only
Erlanger, KY (2) 635,550
(a) Share of Current Annual Rents is the product of the Square Footage, the
Rent per Square Foot, and any ownership interest percentage as noted
below.
(b) These properties are encumbered by mortgage notes payable.
(c) Current annual rent represent the 22.5% ownership interest in a limited
liability company owning land and buildings in France. Rents are
collected in Euros, conversion rate at December 31, 2003 used.
(d) Current annual rent represents the 74.583% ownership interest as a
tenancy in common in this property.
(e) Current annual rent for the Colliersville, TN property represents the
40% ownership interest in a limited liability company owning land and
building.
(f) Current annual rent represents the 33.33% ownership interest in a
limited partnership owning land and building.
(g) Current annual rent does not include percentage of sales rent, payable
under the lease contract.
-15-
W. P. CAREY & CO. LLC
(h) Current annual rent represents the 95% ownership interest in a foreign
partnership owning land and building. Rents are collected in Euros,
conversion rate at December 31, 2003 used.
(i) INSEE construction index, an index published quarterly by the French
Government.
(j) Current annual rent represents the 75% ownership interest in a foreign
partnership owning land and building. Rents are collected in Euros,
conversion rate at December 31, 2003 used.
(k) Current annual rent represents the 18.54% ownership interest in a
limited partnership owning land and building.
(l) Current annual rent represents the 33.93% ownership interest in a
limited partnership owning land and building.
(m) Current annual rent represents the 80% ownership interest in a foreign
partnership owning land and building. Rents are collected in Euros,
conversion rate at December 31, 2003 used.
(n) The property is mostly vacant, except for one tenant occupying
approximately 4% of the property.
(o) Current annual rent represents the 50% ownership interest in a limited
liability company owning land and building.
(p) Land is currently under development.
(q) Current annual rent represents the 36% ownership interest as a tenancy
in common in this property.
(r) Current annual rent represents the 75% ownership interest in a foreign
partnership owning a building. Rents are collected in Euros, conversion
rate at December 31, 2003 used.
(s) The property is mostly vacant, except for two tenants, one of which is
occupying the space under a sublease that was assigned to WPC. The two
tenants are occupying approximately 33% of the property.
(t) As of December 31, 2003, the property is under contract for sale to a
third party
Item 3. Legal Proceedings.
As of December 31, 2003, the Company was not involved in any material
litigation.
Following a broker-dealer examination of Carey Financial Corporation ("Carey
Financial"), the Company's wholly-owned broker-dealer subsidiary, by the staff
of the Securities and Exchange Commission (the "SEC" or "Commission"), Carey
Financial received a letter from the staff of the Securities and Exchange
Commission, on or about March 4, 2004, alleging certain infractions by Carey
Financial of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder and of the
National Association of Securities Dealers, Inc. ("NASD"). The letter was
delivered for the purpose of requiring Carey Financial to take corrective
action and without regard to any other action the Commission may take with
respect to the broker-dealer examination. It is not known at this time if the
Commission intends to bring any action against Carey Financial. The
infractions alleged are described below.
The staff alleges that in connection with two public offerings of shares of
Corporate Property Associates 15 Incorporated ("CPA(R):15"), Carey Financial and
its retail distributors sold certain securities without an effective
registration statement. Specifically, the staff alleges that CPA(R):15 and
Carey Financial oversold the amount of securities registered in the first
offering (the "Phase I Offering") completed in the fourth quarter of 2002 and
sold securities with respect to the second offering (the "Phase II" Offering)
before a registration statement with respect to such offering became effective
in the first quarter of 2003. It appears to be the staff's position that,
notwithstanding the fact that pending effectiveness of the registration
statement investor funds were delivered into escrow and not to CPA(R):15 or
Carey Financial, such delivery involved sales of securities in violation of
Section 5 of the Securities Act of 1933. In the event the Commission pursues
these allegations, or if affected CPA(R):15 investors bring a similar private
action, CPA(R):15 might be required to offer the affected investors the
opportunity to receive a return of their investment. It cannot be determined
at this time if, as a consequence of investor funds being returned by
CPA(R):15, Carey Financial would be required to return to CPA(R):15 the
commissions paid by CPA(R):15 on purchases ultimately rescinded or, if so
required, the amount of commissions which would be due, as that amount would be
contingent on the amount of purchases actually rescinded. Further, as part of
any action against the Company, the Commission could seek disgorgement of any
such commissions or different or additional penalties or relief, including
without limitation, injunctive relief and/or civil monetary penalties,
irrespective of the outcome of any rescission offer. As such, the Company
cannot predict the potential effect such a rescission offer or SEC action may
ultimately have on the operations of Carey Financial or the Company. There can
be no assurance such effect, if any, would not be material.
-16-
The staff also alleges that the prospectus delivered with respect to the Phase
I Offering contained material misstatements and omissions because that
prospectus did not disclose that the proceeds of the Phase I Offering would be
used to advance commissions and expenses payable with respect to the Phase II
Offering. The staff claims that the failure to disclose this use of funds
constitutes a misstatement of a material fact in violation of Section 17(a) of
the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of
1934 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934.
Carey Financial has reimbursed CPA(R):15 for the interest cost of advancing the
commissions that were later recovered from the Phase II Offering proceeds. It
cannot be determined at this time what relief, if any, would be granted if an
action were to be brought by the Commission if an action were to be brought by
the Commission or a private investor of CPA(R):15 with respect to these
allegations. As such, the Company cannot predict the potential effect such an
action may ultimately have on the operations of Carey Financial, or the
Company. There can be no assurance such effect, if any, would not be material.
The staff also alleges that the CPA(R):15 offering documents contained material
misstatements and omissions because they did not include a discussion of the
manner in which dividends would be paid to the initial investors in the Phase
II offering. The staff letter asserts that the payment of dividends to the
Phase II shareholders resulted in significantly higher annualized rates of
return to the initial Phase II shareholders than was being earned by the Phase
I shareholders, and that the Company failed to disclose to the Phase I
shareholders the potential differences in the rates of return. The staff
claims that the failure to make this disclosure constitutes a misstatement of a
material fact in violation of Section 17(a) of the Securities Act of 1933,
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
under the Securities Exchange Act of 1934. It cannot be determined at this time
what relief, if any, would be granted if an action were to be brought by the
Commission or an affected CPA(R):15 investor with respect to these allegations.
There can be no assurance that, if an action were to be brought by the
Commission or a private investor of CPA(R):15 against Carey Financial, the
remedy imposed would not be material.
In addition to the allegations with respect to the CPA(R):15 offerings, the
staff alleges that Carey Financial violated Section 15(b)(7) of the Securities
Exchange Act of 1934 and Rule 15b-7 promulgated thereunder and NASD Rule
1031(a) with respect to the failure of four employees to transfer their
broker-dealer licenses to Carey Financial before they began work for Carey
Financial. These licenses have since been transferred to Carey Financial. It
cannot be determined at this time what remedy, if any, would be pursued by the
Commission if any action were to be brought by the Commission with respect to
these allegations. The Company does not expect such a remedy to be material;
however, there can be no assurance that if the Commission brought an action
against Carey Financial the remedy imposed would not be material.
-17-
The staff alleges that Carey Financial violated NASD Conduct Rule 3060 by
providing registered broker-dealers associated with its retail distributors who
sold shares of CPA(R):15 with non-cash sales incentives in excess of $100.
Neither the Commission nor the NASD has yet instituted a formal action against
Carey Financial and, in the letter, the staff only cited this violation in
general terms. The Company is in the process of ascertaining the specific
factual details forming the basis for these allegations. The Company is unable
to predict at this time the potential outcome of any SEC action against
Carey Financial with respect to such allegation, or the potential effect
an action may have on the operations of Carey Financial or the Company.
In addition to all of the above, the staff has alleged that each of these
actions constituted a violation of NASD Conduct Rules 3010(a) and (b) for Carey
Financial's failure to supervise its business activities and enforce its
written supervisory procedures. Neither the Commission nor the NASD has yet
instituted an action against Carey Financial. The Company is in
the process of ascertaining the specific factual details forming the basis for
these allegations. The Company is unable to predict at this time the potential
outcome of an action against Carey Financial or the potential effect an
action may have on the operations of Carey Financial or the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the fourth quarter of the year ended December
31, 2003 to a vote of security holders, through the solicitation of proxies or
otherwise.
-18-
W. P. CAREY & CO. LLC
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
Information with respect to Registrant's common equity is hereby incorporated by
reference to page 49 of the Company's Annual Report contained in Appendix A.
Item 6. Selected Financial Data.
Selected Financial Data are hereby incorporated by reference to page 1 of the
Company's Annual Report contained in Appendix A.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's Discussion and Analysis are hereby incorporated by reference to
pages 2 to 15 of the Company's Annual Report contained in Appendix A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk:
Market risk is the exposure to loss resulting from changes in interest, foreign
currency exchange rates and equity prices. In pursuing its business plan, the
primary risks to which WPC is exposed are interest rate risk and foreign
currency exchange risk.
The value of WPC's real estate is subject to fluctuations based on changes in
interest rates, local and regional economic conditions and changes in the
creditworthiness of lessees, all which may affect WPC's ability to refinance
property-level mortgage debt when balloon payments are scheduled.
$128,125 of WPC's long-term debt bears interest at fixed rates, and therefore
the fair value of these instruments is affected by changes in the market
interest rates. The following table presents principal cash flows based upon
expected maturity dates of the debt obligations and the related weighted-average
interest rates by expected maturity dates for the fixed rate debt. The interest
rate on the variable rate debt as of December 31, 2003 ranged from 2.34% to
6.44%. The interest on the fixed rate debt as of December 31, 2003 ranged from
6.11% to 9.13%.
Advances from the line of credit bear interest at an annual rate of either (i)
the one, two, three or six-month LIBOR, plus a spread which ranges from 0.6% to
1.45% depending on leverage or corporate credit rating or (ii) the greater of
the bank's Prime Rate and the Federal Funds Effective Rate, plus .50%, plus a
spread of up to .125% depending on WPC's leverage.
(in thousands)
2004 2005 2006 2007 2008 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------
Fixed rate debt $21,145 $5,790 $19,864 $12,293 $6,590 $62,443 $128,125 $128,435
Weighted average
interest rate 8.07% 7.40% 7.13% 7.14% 7.47% 7.22%
Variable rate debt $31,151 $2,272 $ 2,546 $ 2,816 $3,109 $39,174 $ 81,068 $ 81,068
WPC conducts business in France. Accordingly, WPC is subject to foreign currency
exchange rate risk from the effects of exchange rate movements on foreign
currencies and this may affect our future costs and cash flows; however,
exchange rate movements to date have not had a significant effect on WPC's
financial position or results of operations. For the year ended December 31,
2003, WPC recognized $556 in foreign currency transaction gains in connection
with the transfer of cash from foreign operating subsidiaries to the parent
company. The cash received was subsequently converted into dollars. In addition,
for the year ended December 31, 2003, the Company recognized unrealized foreign
currency gains of $130. The cumulative foreign currency translation adjustment
reflects a gain of $679. To date, WPC has not entered into any foreign currency
forward exchange contracts or other derivative financial instruments to hedge
the effects of adverse fluctuations in foreign currency exchange rates.
-19-
W. P. CAREY & CO. LLC
Scheduled future minimum rents, exclusive of renewals, under non-cancelable
operating leases resulting from WPC's foreign operations are as follows:
(in thousands) 2004 2005 2006 2007 2008 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
Minimum Rents (1) $7,547 $7,539 $7,292 $7,164 $6,711 $18,939 $55,192
Scheduled principal payments for the mortgage notes payable during each of the
next five years following December 31, 2003 and thereafter are as follows:
(in thousands) 2004 2005 2006 2007 2008 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
Mortgage notes
Payable(1) $2,151 $2,272 $2,546 $2,816 $3,109 $39,174 $52,068
(1) Based on December 31, 2003 exchange rate for the Euro.
Item 8. Consolidated Financial Statements and Supplementary Data:
The following consolidated financial statements and supplementary data of the
Company are hereby incorporated by reference to pages 16 to 49 of the Company's
Annual Report contained in Appendix A:
(i) Report of Independent Auditors.
(ii) Consolidated Balance Sheets as of December 31, 2003 and 2002
(iii) Consolidated Statements of Operations for the years ended December
31, 2003, 2002 and 2001
(iv) Consolidated Statements of Members' Equity for the years ended
December 31, 2001, 2002 and 2003
(v) Consolidated Statements of Cash Flows for the years ended December
31, 2003, 2002 and 2001
(vi) Notes to Consolidated Financial Statements
Item 9. Disagreements on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures
The Co-Chief Executive Officers and Chief Financial Officer of the Company have
conducted a review of the Company's disclosure controls and procedures as of
December 31, 2003.
The Company's disclosure controls and procedures include the Company's controls
and other procedures designed to ensure that information required to be
disclosed in this and other reports filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act") is accumulated and communicated to the
Company's management, including its co-chief executive officers and chief
financial officer, to allow timely decisions regarding required disclosure and
to ensure that such information is recorded, processed, summarized and reported,
within the required time periods.
Based upon this review, the Company's co-chief executive officers and chief
financial officer have concluded that the Company's disclosure controls (as
defined in pursuant to Rule 13a-14(c) promulgated under the Exchange Act) are
sufficiently effective to ensure that the information required to be disclosed
by the Company in the reports it files under the Exchange Act is recorded,
processed, summarized and reported with adequate timeliness.
-20-
W. P. CAREY & CO. LLC
PART III
Item 10. Directors and Executive Officers of the Registrant.
This information will be contained in Company's definitive Proxy Statement with
respect to the Company's 2004 Annual Meeting of Shareholders, to be filed with
the Securities and Exchange Commission within 120 days following the end of the
Company's fiscal year, and is hereby incorporated by reference.
Item 11. Executive Compensation.
This information will be contained in Company's definitive Proxy Statement with
respect to the Company's 2004 Annual Meeting of Shareholders, to be filed with
the Securities and Exchange Commission within 120 days following the end of the
Company's fiscal year, and is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
This information will be contained in Company's definitive Proxy Statement with
respect to the Company's 2004 Annual Meeting of Shareholders, to be filed with
the Securities and Exchange Commission within 120 days following the end of the
Company's fiscal year, and is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions.
This information will be contained in Company's definitive Proxy Statement with
respect to the Company's 2004 Annual Meeting of Shareholders, to be filed with
the Securities and Exchange Commission within 120 days following the end of the
Company's fiscal year, and is hereby incorporated by reference.
Item 14. Principal Accounting Fees and Services
This information will be contained in Company's definitive Proxy Statement with
respect to the Company's 2004 Annual Meeting of Shareholders, to be filed with
the Securities and Exchange Commission within 120 days following the end of the
Company's fiscal year, and is hereby incorporated by reference.
-21-
W. P. CAREY & CO. LLC
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements:
The following financial statements are filed as a part of this
Report:
Report of Independent Auditors.
Consolidated Balance Sheets as of December 31, 2003 and
2002.
Consolidated Statements of Operations for the years ended
December 31, 2003, 2002, and 2001.
Consolidated Statements of Members' Equity for the years
ended December 31, 2001, 2002, and 2003.
Consolidated Statements of Cash Flows for the years ended
December 31, 2003, 2002, and 2001.
Notes to Consolidated Financial Statements.
The consolidated financial statements are hereby incorporated by reference to
pages 16 to 49 of the Company's Annual Report contained in Appendix A.
(a) 2. Financial Statement Schedule:
The following schedule is filed as a part of this Report:
Report of Independent Auditors.
Schedule III - Real Estate and Accumulated Depreciation as
of December 31, 2003.
Notes to Schedule III.
Schedule III and notes thereto are contained herein on
pages 26 to 33 of this Form 10-K.
Financial statement schedules other than those listed above
are omitted because the required information is given in the
financial statements, including the notes thereto, or because
the conditions requiring their filing do not exist.
-22-
W. P. CAREY & CO. LLC
(a) 3. Exhibits:
The following exhibits are filed as part of this Report. Documents other than
those designated as being filed herewith are incorporated herein by reference.
Exhibit Method of
No. Description Filing
- -------- ----------- -------------------
3.1 Amended and Restated Limited Liability Company Exhibit 3.1 to Registration
Agreement of Carey Diversified LLC. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
3.2 Bylaws of Carey Diversified LLC. Exhibit 3.2 to Registration
Statement on Form S-4
(No. 333-37901) dated October
15, 1997
4.1 Form of Listed Share Stock Certificate. Exhibit 4.1 to Registration
Statement on Form S-4
(No. 333-37901) dated October
15, 1997
10.1 Management Agreement Between Carey Management LLC Exhibit 10.1 to Registration
and the Company. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
10.2 Non-Employee Directors' Incentive Plan. Exhibit 10.2 to Registration
Statement on Form S-4
(No. 333-37901) dated October
15, 1997
10.3 1997 Share Incentive Plan. Exhibit 10.3 to Registration
Statement on Form S-4
(No. 333-37901) dated October
15, 1997
10.4 Investment Banking Engagement Letter between Exhibit 10.4 to Registration
W. P. Carey & Co. and the Company. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
10.5 Non-Statutory Listed Share Option Agreement. Exhibit 10.5 to Registration
Statement on Form S-4
(No. 333-37901) dated October
15, 1997
10.6 Second Amended and Restated Credit Agreement Exhibit 10.6 to Form 10-K,
dated as of March 23, 2001 dated March 18, 2002
21.1 List of Registrant Subsidiaries Filed herewith
23.1 Consent of PricewaterhouseCoopers LLP Filed herewith
31.1 Certification of Chief Executive Officer pursuant to Filed herewith
Section 302(a) of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Executive Officer pursuant to Filed herewith
Section 302(a) Of the Sarbanes-Oxley Act of 2002.
-23-
W. P. CAREY & CO. LLC
Exhibit Method of
No. Description Filing
- -------- ----------- -------------------
32.1 Chief Executive Officer's Certification Pursuant to Section 906 Filed herewith
of the Sarbanes-Oxley Act of 2002.
32.2 Chief Financial Officer's Certification Pursuant to Section 906 Filed herewith
of the Sarbanes-Oxley Act of 2002.
99.13 Amended and Restated Agreement of Limited Partnership Exhibit 99.13 to Registration
of CPA(R):1. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
99.16 Amended and Restated Agreement of Limited Partnership Exhibit 99.16 to Registration
of CPA(R):4. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
99.18 Amended and Restated Agreement of Limited Partnership Exhibit 99.18 to Registration
of CPA(R):6. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
99.21 Amended and Restated Agreement of Limited Partnership Exhibit 99.21 to Registration
of CPA(R):9. Statement on Form S-4
(No. 333-37901) dated October
15, 1997
99.22 Listed Share Purchase Warrant. Exhibit 99.22 to Registration
Statement on Form S-4
(No. 333-37901) dated October
15, 1997
(b) Report on Form 8-K:
During the quarter ended December 31, 2003, the Company was not required to file
any reports on Form 8-K.
-24-
W. P. CAREY & CO. LLC
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized. W. P.
CAREY & CO. LLC
3/12/2004 BY: /s/ John J. Park
- -------------- -----------------------------------
Date John J. Park
Managing Director and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
BY: W. P. CAREY & CO. LLC
3/12/2004 BY: /s/ William P. Carey
- -------------- -----------------------------------
Date William P. Carey
Chairman of the Board, Co-Chief
Executive Officer and Director
3/12/2004 BY: /s/ Francis J. Carey
- -------------- -----------------------------------
Date Francis J. Carey
Vice Chairman of the Board,
Chairman of the Executive Committee
and Director
3/12/2004 BY: /s/ Gordon F. DuGan
- -------------- -----------------------------------
Date Gordon F. DuGan
President and Co-Chief Executive
Officer and Director
3/12/2004 BY: /s/ George E. Stoddard
- -------------- -----------------------------------
Date George E. Stoddard
Senior Executive Vice President,
Chairman of the Investment Committee,
and Director
3/12/2004 BY: /s/ Nathaniel S. Coolidge
- -------------- -----------------------------------
Date Nathaniel S. Coolidge
Chairman of the Audit Committee and
Director
3/12/2004 BY: /s/ Eberhard Faber IV
- -------------- -----------------------------------
Date Eberhard Faber IV
Chairman of Nomination & Corporate
Governance Committee and Director
3/12/2004 BY: /s/ Dr. Lawrence R. Klein
- -------------- -----------------------------------
Date Dr. Lawrence R. Klein
Chairman of the Economic Policy
Committee and Director
3/12/2004 BY: /s/ Charles C. Townsend, Jr.
- -------------- -----------------------------------
Date Charles C. Townsend, Jr.
Chairman of the Compensation
Committee and Director
3/12/2004 BY: /s/ Ralph Verni
- -------------- -----------------------------------
Date Ralph Verni
Director
3/12/2004 BY: /s/ Karsten von Koller
- -------------- -----------------------------------
Date Karsten von Koller
Director
3/12/2004 BY: /s/ Reginald Winssinger
- -------------- -----------------------------------
Date Reginald Winssinger
Director
3/12/2004 BY: /s/ John J. Park
- -------------- -----------------------------------
Date John J. Park
Managing Director and Chief
Financial Officer
3/12/2004 BY: /s/ Claude Fernandez
- -------------- -----------------------------------
Date Claude Fernandez
Managing Director and Chief
Accounting Officer
-25-
REPORT of INDEPENDENT AUDITORS
on FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of
W. P. CAREY & CO. LLC:
Our audits of the consolidated financial statements referred to in our report
dated March 12, 2004 appearing in the 2003 Annual Report to Shareholders of W.
P. CAREY & CO. LLC (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 15(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 12, 2004
-26-
W. P. CAREY & CO. LLC
SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION
as of December 31, 2003
Initial Cost to Company
-----------------------
Costs
Capitalized Increase
Personal Subsequent to (decrease) in Net
Description Encumbrances Land Buildings Property Acquisition (a) Investments (b)
----------- ------------ ---- --------- -------- --------------- ---------------
Operating Method:
Office, warehouse and
manufacturing buildings
leased to various
tenants in Broomfield,
Colorado $ 247,993 $ 2,538,263 $1,200,000
Distribution facilities
and warehouses in
Erlanger, Kentucky
partially leased to
Alstom Power, Inc. $10,777,726 1,525,593 21,427,148 255,329 141,235
Supermarkets leased to
Winn-Dixie Stores, Inc. 855,196 6,762,374 (4,536,639)
Warehouse and manufac-
turing plant leased to
Pre Finish Metals
Incorporated 324,046 8,408,833
Land leased to Unisource
Worldwide, Inc. 4,573,360
Centralized telephone
bureau leased to Exel
Communications, Inc. 925,162 4,023,627 101,983
Office building leased to
Industrial Data Systems
Corporation and
Olmstead Kirk Paper
Company 164,113 2,343,849 445,640
Computer center leased to
AT&T Corporation 269,700 5,099,964 4,165,742 (2,612)
Office, manufacturing and
warehouse buildings
leased to AMS Holding
Group 1,389,951 5,337,002 92,326 (1,039,757)
Warehouse and
distribution leased to
Shinn Systems 246,949 5,034,911 1,363,829
Manufacturing and office
buildings leased to
Penn Virginia Coal
Company 240,072 609,267
Land leased to Exide
Electronics Corporation 1,638,012 (809,735)
Warehouse/ office
research facilities
leased to
Lockheed Martin
Corporation 1,218,860 6,283,475 539,706
Warehouse/distribution
facilities leased to
Games Workshop, Inc. 293,801 1,912,271 31,176
Gross Amount at which Carried at Close of Period(d)
---------------------------------------------------
Life on which
Depreciation
in Latest
Statement of
Personal Accumulated Date Income
Description Land Buildings Property Total Depreciation(d) Acquired is Computed
----------- ---- --------- -------- ----- --------------- -------- ------------
Operating Method:
Office, warehouse and
manufacturing buildings
leased to various
tenants in Broomfield,
Colorado $ 247,993 $ 3,738,263 $ 3,986,256 $511,990 1/1/1998 40 yrs.
Distribution facilities
and warehouses in
Erlanger, Kentucky
partially leased to
Alstom Power, Inc. 1,525,593 21,823,712 23,349,305 3,240,623 1/1/1998 40 yrs.
Supermarkets leased to
Winn-Dixie Stores, Inc. 406,674 2,674,257 3,080,931 415,274 1/1/1998 40 yrs.
Warehouse and manufac-
turing plant leased to
Pre Finish Metals
Incorporated 324,046 8,408,833 8,732,879 1,261,326 1/1/1998 40 yrs.
Land leased to Unisource
Worldwide, Inc. 4,573,360 4,573,360 1/1/1998 N/A
Centralized telephone
bureau leased to Exel
Communications, Inc. 925,162 4,125,610 5,050,772 612,160 1/1/1998 40 yrs.
Office building leased to
Industrial Data Systems
Corporation and
Olmstead Kirk Paper
Company 164,113 2,789,489 2,953,602 395,059 1/1/1998 40 yrs.
Computer center leased to
AT&T Corporation 269,700 9,263,094 9,532,794 508,391 1/1/1998 40 yrs.
Office, manufacturing and
warehouse buildings
leased to AMS Holding
Group 1,107,855 4,671,667 5,779,522 673,309 1/1/1998 40 yrs.
Warehouse and
distribution leased to
Shinn Systems 246,949 6,398,740 6,645,689 929,780 1/1/1998 40 yrs.
Manufacturing and office
buildings leased to
Penn Virginia Coal
Company 240,072 609,267 849,339 91,390 1/1/1998 40 yrs.
Land leased to Exide
Electronics Corporation 828,277 828,277 1/1/1998 N/A
Warehouse/ office
research facilities
leased to
Lockheed Martin
Corporation 1,218,860 6,823,181 8,042,041 1,014,125 1/1/1998 40 yrs.
Warehouse/distribution
facilities leased to
Games Workshop, Inc. 293,801 1,943,447 2,237,248 287,498 1/1/1998 40 yrs.
-27-
W. P. CAREY & CO. LLC
SCHEDULE III - REAL ESTATE and ACCUMULATED DEPRECIATION
as of December 31, 2003
Initial Cost to Company
-----------------------
Costs
Capitalized Increase
Personal Subsequent to (decrease) in Net
Description Encumbrances Land Buildings Property Acquisition (a) Investments (b)
----------- ------------ ---- --------- -------- --------------- ---------------
Warehouse and office
facility leased to
BellSouth
Entertainment, Inc. 1,173,108 3,368,141 242,885 98,916
Manufacturing and office
facility leased to Yale
Security, Inc. 345,323 3,913,657 60,394
Manufacturing facilities
leased to Faurecia
Exhaust Systems, Inc.
and Star Cartage Inc. 223,585 9,652,682 101,260 203,626
Manufacturing facilities
leased to Northern
Tube, Inc. 31,725 1,691,580
Manufacturing facilities
leased to Anthony's
Manufacturing Company,
Inc. 2,051,769 5,321,776 152,368
Manufacturing facilities
in Traveler's Rest, SC 263,618 4,046,406 (2,506,543)
Land leased to AutoZone,
Inc. 12,593,719 9,382,198 (147,949)
Office facility leased to
Verizon Communications,
Inc. 219,548 1,578,592
Land leased to Sybron
Dental Specialities,
Inc. 1,135,003 17,286
Office facility in
Bloomingdale, IL leased
to 5 lessees 1,074,640 11,452,967 154,728
Manufacturing facilities
leased to Tooling
Systems